Outsourcing

Apple says workforce diversity "inspires creativity and innovation," but one of Apple's major contractors, Infosys, is far from diverse.

In 2013, Infosys, an India-based provider of IT services, had 509 workers assigned to Apple sites in Cupertino, Calif. Of that number, 499 -- or 98% -- are listed as Asian, with the remaining 10 identified as either white or black, according to government records.

Apple isn't the only company where a large majority of Infosys workers are Asian. Of 427 people employed by Infosys at insurance giant Aetna's Hartford, Conn., offices, 418 were identified as Asian in a court filing.

In the District of Columbia, where Infosys has developed a government-funded healthcare platform, 63 of 71 Infosys workers are Asian. And there are many other major employers that use Infosys with similarly large percentages of Asian workers, according to recently filed court documents in a Wisconsin federal lawsuit brought by four IT workers alleging discrimination.

This lopsided representation of Asian people among the workforces of IT services providers is not limited to Infosys. And it is a consequence of the H-1B visa program, which the offshore IT services industry uses to procure most of its labor.

Nearly 86% of the H-1B visas issued by the U.S. government for workers in computer occupations are for people from India, according to a Computerworld analysis of government data obtained through a Freedom of Information Act request.

IT services providers "apparently cannot get enough Indian programmers, which has little to do with a shortage of competent natives for these types of jobs, but a lot to do with the industry's business model," said Lindsay Lowell, director of policy studies at Georgetown University's Institute for the Study of International Migration.

Offshore companies that provide IT services "prefer young H-1B programmers because the visa offers control over this contracted short-term workforce, it permits them to pay less than they would for experienced natives and they cultivate programmers who can better serve their clients after returning home to India," said Lowell.

Many of these H-1B visa holders will work for an alternate universe of companies that primarily hire IT professionals from India. In many instances, these workers may be used to replace people such as Brian Buchanan, a former senior IT staffer at Southern California Edison (SCE).

Buchanan last month joined a lawsuit filed earlier against Tata Consultancy Services in federal court, accusing the company of discrimination. The claims in the lawsuit, which was filed by the same legal team involved in the Infosys case in Wisconsin, are similar to charges Infosys is now fighting.

Buchanan was laid off earlier this year from SCE and had to train his replacements from Tata, who were from India on a visa, according to the lawsuit. Tata has called the lawsuit "baseless," and it reiterated that argument following the filing of last month's amended complaint. Infosys has previously denied the allegations as well.

Prior to his layoff, Buchanan attended a job fair organized by SCE for its soon-to-be terminated employees.

At the Tata booth, which was staffed with "South Asians," Buchanan spoke with a Tata regional manager, who told him that the company was hiring for jobs at SCE and elsewhere. But the Tata manager "was dismissive" of Buchanan's inquiries, the lawsuit alleges. In contrast, Buchanan "observed that the Tata employees spent considerably more time speaking with South Asian applicants and spoke to them in Hindi about available positions."

The lawsuit against Tata alleges that the firm staffed SCE "with an almost 100% South Asian workforce." It claims that about 95% of Tata's overall U.S. workforce is made up of South Asians.

A number of technology companies, including Apple, have begun disclosing the workforce diversity data they file with the U.S. Equal Employment Opportunity Commission (EEOC). This information usually stays confidential, unless a company voluntarily discloses it or it is released as part of a court case, which is what happened in the Infosys case.

These court cases have the potential to shed more light on the offshore outsourcing industry. They could also put Infosys and Tata, two of the top users of H-1B visas, in the position of having to defend their business models. This defense has begun.

George Stohner, an attorney representing Infosys in the Wisconsin case, told the judge that "there's nothing that requires a U.S. employer doing business in the United States to manufacture in the United States. You can employ elsewhere."

"Nor is there ... any requirement," said Stohner, "for a foreign company doing business in the United States to employ workers in the United States." Infosys is required only to follow immigration laws, he said, according to a court transcript.

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For fiscal year 2014, new employment only. Source: Computerworld analysis of U.S. Citizenship and Immigration Service data

There were around 76,000 H-1B visas issued to people in computer occupations in 2014. That figure includes those applying for new employment, whether or not they fall under the overall H-1B cap (some areas, such as research, are exempt).

After India, which garners the top share of visas for computer jobs by an overwhelming margin, China is in second place -- just over 5% of H-1B visas for computer jobs go to Chinese people. No other nation rises above 1%, according to U.S. Citizenship and Immigration Services H-1B data for the 2014 federal fiscal year.

That's considerably different from the breakdown in other fields, such as engineering, where workers from India received fewer than half of the H-1B visas for new employment and China's share was almost four times the size of its share of the visas for computer jobs.

India is able to flourish in the IT services business because it has some advantages over countries like China, which was at one time seen as a potential IT services rival to the U.S.

Indian IT services providers "have proven skill sets in IT services, and English proficiency plays a major role as well," explained David Rutchik, a managing director at Pace Harmon, an outsourcing consulting and advisory firm. Moreover, "security concerns are certainly an issue" for China, and on top of that "China doesn't have mature IT services for export capability either," he added.

But China may have a more developed internal IT market, said Eric Simonson, managing partner for research at the Everest Group, an IT services research and consulting firm. "The domestic IT business in China is stronger than in India, and the Chinese economy is larger and broader than India's economy; together these provide more career opportunities and increase labor rates for technical talent," Simonson said.

Chinese IT workers can work for companies such as Alibaba, an e-commerce site. "In India, these dot-com opportunities did not exist until fairly recently -- Flipkart being a hot recent example," he said. Flipkart is also an e-commerce site.

One way to get an indication of the imbalance in global distribution of H-1B visas for computer occupations is to look at the breakdown of H-1B visas that go to engineers.

Last year, the U.S. issued H-1B visas to 8,103 engineers, including people specializing in disciplines such as electrical, mechanical, civil, chemical and aeronautical engineering. Workers from India received the largest share -- 47% -- of those visas, but that's a far smaller percentage than the nearly 86% of H-1B visas for computer occupations that go to people from India. China had 19.5% of the engineering visas while Canada got 3.4%, Korea 2.4%, Mexico 2.2%, and Taiwan and Iran tied with 2.2% each, according to government data obtained by Computerworld.

"This demonstrates just how dominant the outsourcing companies have become," said Russell Harrison, director of government relations at the IEEE-USA, of the country-by-country breakdown of H-1B visas that go to people in computer occupations.

The IEEE has 60,000 members in India and 40,000 in China, and "if companies were looking around the world to find the best possible candidates for their jobs, you would expect a distribution that was similar to the distribution of engineers on the planet, and that's not what you have," said Harrison.

Apple and Aetna were both contacted but didn’t have comments by deadline.